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Hammerson: Bicester withstanding Covid-19

Amid media speculation of a decrease in Chinese visitors, Hammerson has assured Drapers that the performance of its designer outlet Bicester Village has not been “significantly” affected by the Covid-19 coronavirus

“We’re monitoring the situation very closely but the relative percentage of Chinese visitors to Bicester and our outlets is small – around 9%,” said Mark Bourgeois, the shopping centre owner’s UK and Ireland managing director.  “When we look at long-term trends and previous pandemics the sales growth trends weren’t really affected in the medium term. We’re not in anyway underplaying the potential significance of this, but so far sales have continued to be strong and there has not been a significant dip in footfall as of yet.” 

Hammerson announced a fall in profits by 10.9% to £214m and an 11.2% decline in rental income to £308.5m for the year to 31 December. However, the property company made £542m worth of disposals in 2019, ahead of targets of £500m. Premium outlets, which include Bicester Village, were noted to have reported an “outstanding contribution”. 

On the results, Bourgeois said: “We feel pretty good about the fact that we’ve delivered what we said we would do. It is a really tough retail market, and that clearly played out in some of the numbers but I think we can feel reasonably satisfied with today’s result.” 

He added: “There is a lot of work still to do.” 

In its results, Hammerson revealed that of the 234 units affected by tenant restructuring since the start of 2018, around half had renegotiated their rents under company voluntary arrangements. As a result of the restructuring on the high street, other retailers such as Jigsaw and Primark, have been asking for similar rental discounts across their store portfolios.

However, Bourgeois said: “It’s not a landslide disaster zone.

”The market is really tough and a CFO of a super healthy retail business is still going to be demanding rent cuts and they want a deal that the next-door neighbour got in a CVA.

”Ultimately, the negotiations come down on a site-by-site basis. What we tend to see is the negotiations tend to take a lot longer but we can arrive at a deal that works for us both. We are happy with the volumes of the deals and 70% of deals across our portfolio were struck above previous passing rents.”

The landlord is also focused on repurposing department store space affected by high street closures.

Hammerson has submitted planning permission for House of Fraser’s Reading store that is expected to “get consent in the not too distant future”. 

”It will create a riverside location with leisure, bowling and potentially golf alongside flagship retail,” he said. 

Hammerson announced this morning that Irish department store Brown Thomas would replace the existing House of Fraser unit in Dundrum, Dublin. 

 

 

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